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Post Info TOPIC: Directors Salary not taken out of the bank account


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Directors Salary not taken out of the bank account


Hello, this might be a daft question so I hope you don't mind me asking.

A client has been declaring the basic salary under RTI, however when we have come to prepare the accounts, there are no salary amounts leaving the bank on the set dates.

When I have asked client has said that they pay themselves in cash here and there and have produced the cash book.

Do you think this acceptable for HMRC or should they clearly show the salary leaving the bank account in one payment every month?

Thank you for reading and any responses.



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If he is taking it in cash 'here and there' then the best way to ensure that he isn't taking more salary than is being declared under RTI is to credit his salary to his DCA. Then when he takes the cash it doesn't matter how much it is, as long as his DCA does not go overdrawn. The entry when taking the cash will be DR DCA £X and CR Cash £X.

If the account goes into debit then he might be subject to a tax charge on notional interest (as the company has effectively given him an interest free loan) and there could also be a corporation tax charge for the Company on the overdrawn amount known as a S455 charge.

I hope I have explained that clearly!

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Sue 



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Hi Sue

Thank you for your helpful answer


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